Journal Article

Bank and nonbank competition for small business credit: evidence from the 1987 and 1993 national surveys of small business finances

Abstract: Using newly available data from the Board's 1993 National Survey of Small Business Finances together with data from the 1987 survey, this article analyzes competition between banks and nonbanks in the U.S. market for small business credit. It explores nonbank competition as an explanation for the decline in banks' share of business lending by examining sources of credit used by small firms. It examines both the bank and nonbank shares of the dollar amount of credit to small businesses, including how these shares have changed from 1987 to 1993, and the incidence of small business borrowing, which is defined as the percentage of firms using credit of a certain type or from a particular source. Overall, the results indicate that small businesses obtained a higher percentage of their credit from nonbanks in 1993 than in 1987 but that this difference was small--about 2.0 percentage points.

Keywords: Nonbank financial institutions; Small business; Savings and loan associations;

JEL Classification: G20; G32; L11;

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Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Federal Reserve Bulletin

Publication Date: 1996-11

Volume: 82

Issue: Nov